Impact of the Coronavirus Pandemic

Delivered March 27th, 2020. Contributors: Benjamin H. and

Impact of the Coronavirus Pandemic

This research provides insights into how cities and governments are currently being affected by the coronavirus, the expected changes in US cities in reaction to the coronavirus pandemic, and industries that are currently being affected (or are expected to be affected) the most by the coronavirus pandemic. As this pandemic disrupts all aspects of human activities in the United States, there is increased demand for telemedicine and a high possibility that several governments will begin to embrace and encourage telework. Also, the industries that are most vulnerable to the pandemic's impact include mining and oil and gas, transportation, leisure and hospitality, and employment services. More details on the state of this pandemic and its resultant effects have been provided below.

Current Impacts of the Coronavirus Pandemic

Massive demand for telemedicine

As the COVID-19 pandemic intensifies in the United States, the adoption of telemedicine has also grown consequently. Most experts agree that telemedicine is a low-cost and impactful tool in slowing the spread of the coronavirus.

Through telemedicine, there is less burden on hospitals and hospital beds, as patients without in-person needs can be redirected for medical care. This has given rise to its increased adoption.

Recently, the United States president, Donald Trump, "expanded telemedicine provisions under the Medicare plan — a public insurance plan for senior Americans — allowing physicians to get paid equally for in-person or remote visits, and approving more devices and programs like Skype to be used to telemedicine."

In New York City, Dr. Shabana Khan — a psychiatrist at NYU Langone — reveals that the academic medical center absorbs some of the biggest populations of COVID-19 patients in the United States. According to Dr. Khan, "the telemedicine system has gone from serving 1,500 patients a month to about 3,000 a day in the past week."

Cleveland Clinic — another academic medical center based in Cleveland, Ohio — has been encouraging patients who are worried about coronavirus symptoms to make use of a virtual service known as Express Care Online. However, the huge volumes of people trying to consult with doctors have led to a breakdown of such telemedicine technologies.

Job losses

The current pandemic has resulted in job losses across US cities. According to analysis from the Brookings Institution, Midland, Texas, is expected to be the city that will experience the largest share of job losses in America.

A major reason why the city of Midland is expected to witness such a significant loss of jobs is the fact that 42% of Midland's jobs are located in high-risk industries.

Initial job losses during the current public health crisis in America came from restaurants and stores that were forced to shut their doors. Besides the enforcement of "shelter-in-place" orders from several local governments, more consumers have also opted to stay at home rather than risk exposure to the virus.

In the last week, 3.3 million people in the United States filed claims for unemployment.

Access restrictions

Travel restrictions are among the most evident impacts of the current pandemic in cities. In the United States, city and state governments are reacting individually to this situation. Notable examples of governments that have made such moves include New York City, California, Illinois, Ohio, Massachusetts, and Washington.

All of these regions, and many others, have banned gatherings over certain numbers and closed bars and restaurants.

City and state governments that have not banned such gatherings and travel activities have simply recommended "self-imposed social isolation" within their territories. These shutdowns have transformed urban spaces that are usually buzzing into ghost towns.

Severe impact on low-income communities

The Families First Coronavirus Response Act has been passed by the US Senate and House of Representatives to address the effects of the coronavirus pandemic and provide a safety net for workers and families whose livelihoods are affected. However, Human Rights Watch expresses concerns that the legislation only guarantees sick leave to 20% of private-sector workers.

Human Rights Watch expresses this concern because companies with over 500 employees are exempted, while those with less than 50 employees are permitted to apply for an exemption. Therefore, a lot of workers at large supermarkets, restaurant chains, and retailers who fall under these categories and usually have low-wage positions remain unprotected.

Also, while the US government is considering huge payroll tax cuts and bailouts to the hotel, airline, and shale industries, these payroll tax cuts would not benefit individuals "without income, who are furloughed, or whose working hours have been cut in response to COVID-19."

Unauthorized and informal workers such as street vendors, construction workers, and caregivers would also be left out. Additionally, for workers who would eventually benefit from the tax cut, they would only receive amounts that are proportionate to the low income they earn. Eventually, this would not be sufficient to shield them from falling behind on mortgage or rent payments.

In New York City, a COVID-19 survey by CUNY Graduate School of Public Health and Health Policy revealed that "Job loss in NYC disproportionately impacts Hispanics and lower-income city residents."

Reacting to the effects of this pandemic on low-income households, the City of San Francisco introduced "a $5 million fund to reduce exposure to COVID-19 among marginally housed seniors, people with underlying health conditions, and individuals experiencing homelessness, living in shelters, single-room occupancy hotels (SROs), and Permanent Supportive Housing."

In Oakland, the city is also "leasing hotels and converting the rooms into temporary living quarters for people currently residing in homeless encampments." The mayor of Seattle authorized the creation of more than 100 additional shelter spaces at specified sites throughout the city.

Expected Changes

An expected increase in telework

Due to the current coronavirus pandemic, it is expected that cities would embrace telework moving forward. Currently, there are massive experiments in remote work and most people will eventually return to their offices; however, some companies and workers may find remote work to be more effective. Cities and governments are likely to lean into this remote work trend after the pandemic ends.

For instance, the city of Tulsa, Oklahoma, has already "leveraged this concept through its Tulsa Remote initiative, which pays remote workers a small grant to relocate there while helping them forge community and civic connections."

Wentzville, Missouri, is another city that is actively adopting remote work technologies and is likely to continue in this direction beyond the pandemic.

Pandemic-proof assets

Another change that is expected due to the current public health crisis is the likelihood of cities to make their assets pandemic-proof.

Many cities are home to different forms of large-scale infrastructure such as stadiums, convention centers, arenas, and performing arts centers. As a result, these cities converge large groups of people. Therefore, it is expected that city leaders would not only make such assets pandemic-proof, but they are also likely to reduce audience sizes in those facilities.

Additionally, masks may eventually become a requirement within such facilities, as well as tools for medical checks.

Cities that are most likely to adopt this change are those that are dependent on tourism or converge large audiences at event centers. Based on the Brookings Institution's analysis which shows that "COVID-19’s economic downturn will hit tourism-driven cities such as Orlando and Las Vegas hardest", it can be logically inferred that such cities are most likely to adopt these pandemic-proof measures in order to safely reopen their facilities and restore their economy after the pandemic.

Protection for less-advantaged communities

The current COVID-19 pandemic has exposed another loophole in US cities: The need to protect less-advantaged communities. This has become more obvious as several reports reveal that the negative economic consequences of pandemics will be most evident in the "least-advantaged neighborhoods and their residents".

These low-income neighborhoods lack access to medical care and adequate health coverage; they are also the most vulnerable to job losses. If left unaddressed, this fundamental issue can have long-lasting consequences on safety and equity.

Besides the morally unjust nature of economic inequality, concentrated poverty, and economic and racial segregation, these issues also "provide fertile ground for pandemics to take root and spread."

For improved safety, health, and economic competitiveness, governments are likely to work more decisively in restoring more equitable development and economic inclusion. Cities and local leaders are likely to collaborate with state and federal agencies, local foundations, and community development organizations to target needed funds, technical assistance, and support services at these less-advantaged communities.

Oakland and San Francisco are examples of US cities that are currently taking steps to respond to the severity of the COVID-19 pandemic impact in low-income communities. It is expected that these cities, and many others, would be more proactive in their approach after the pandemic is curbed.

Affected Industries

Mining and oil and gas

According to The Brookings Institution, mining and oil and gas is one of the industries where the current COVID-19 outbreak will hit the hardest. The oil and gas industry is affected by two major factors: "A sharp decline in demand amid travel cutbacks as well as a price war between Saudi Arabia and Russia."

The self-quarantine trend which has lowered the demand for oil, as well as Russia and Saudi Arabia's decision to produce more volumes of crude will make United States shale-based oil and gas companies experience difficulties in "[sustaining] themselves for a prolonged period under this scenario."

As of March 20, 2020, the state of Pennsylvania had ordered "all metallurgical and thermal coal mines, as well as major industries, to close operations effective Thursday 8 pm ET (0000 GMT Friday) until further notice to slow the spread of the coronavirus outbreak."

According to James Conca, a Forbes contributor, the US is a highly-industrialized country that consumes about 100 quadrillion BTUs (British thermal units) yearly. The Energy Information Administration further reports that the United States' "general energy breaks down as Industrial (32%), Transportation (29%), Commercial (18%) and Residential (20%)."

Based on these facts, Conca estimates that if the current isolation continues for 3 months, it could lead to significantly less energy consumption in the first three sectors. This shortage might be as much as half, which would decrease energy use by almost 15 quadrillion BTU.

If the US does not make use of 15 quadrillion BTU, this means that the country would not be spending nearly "$400 billion on energy in only three months as a result of this crisis."

Transportation

Transportation is also among the industries expected to be the worst hit by the current public health crisis. Recently, United Airlines revealed that it is bracing for a $1.5 billion drop in revenue in March 2020 compared to the same period last year.

For April and May, this airline also plans to cut its capacity in half. Other US airlines are also planning on taking similar actions, with some airlines planning to freeze hiring and asking their employees to take unpaid leave.

Data provided by Zencargo reveals that losses for United States "retailers — resulting from production and transportation shortages due to coronavirus — could amount to $700 million from March 9 to April 20."

As Americans are now working from home and remaining indoors rather than visiting restaurants and bars, ride-sharing companies like Lyft and Uber are loosing their potential ridership. Both companies have announced that they would stop allowing different users to share a ride. From the data above, it becomes evident that this pandemic will have an adverse effect on the entire logistics industry.

Leisure and hospitality

Another industry that is highly vulnerable to the impact of the current public health crisis is the leisure and hospitality industry.

Recently, the state of California declared a state of emergency after realizing that "a cruise ship returning to the state from Hawaii was being held off the coast of San Francisco because of reported passengers displaying COVID-19 virus symptoms."

All over the United States, many consumers are choosing to stay at home and businesses have also decided to be prudent and restrict non-essential activities and travel.

The fear of community spread through group environments and travel has made the hospitality and travel industry "one of the industries feeling the most immediate impact." Hotels and resorts that were previously booked by excited corporate conference attendees and vacationers are receiving calls to either postpone those plans or cancel them entirely.

Employment services

According to The Brookings Institution, employment services are among the most vulnerable industries that can be affected by this pandemic. This is evident in the record-high 3.3 million Americans who have filed for unemployment amid the COVID-19 pandemic.

In the previous week, jobless claims filed by individuals who sought unemployment benefits increased "by more than 3 million to 3.28 million from 281,000 the previous week." This is the highest figure ever reported in the United States, "beating the previous record of 695,000 claims filed the week ending 2 October 1982."

Responding to this unemployment crisis, the US government is working on releasing a $2 trillion stimulus package to mitigate the impact of COVID-19.

The current surge in unemployment marks the end of the United States' recent historic job growth. Prior to this pandemic, "US employers have added jobs every month for 101 consecutive months." However, in March, the rate of unemployment was 3.5%, representing a 50-year low.

Currently, economists say that it is still too early to estimate the depth and duration of the pandemic’s impact on the US jobs market. While James Bullard — the president of the Federal Reserve Bank of St Louis — has predicted unemployment to reach 30% in the second quarter, Morgan Stanley projects that unemployment would continue at an average of 12.8% over the same time period.

On the other hand, Gus Faucher — the chief economist of the PNC Financial Services Group — states that "there is going to be a lot of hardship for a lot of people.” However, Faucher expects that if the virus is contained by summer, then there would be a “solid rebound.”